Impact of BFSI Industry Competition on Economic Growth in India

Abstract

This study focuses on the economic growth of India by establishing its association with BFSI industry competition and financial innovation. The research work utilized the ARDL bound testing cointegration procedures to verify the link between competition in the BFSI industry, financial innovation, and economic growth in the short and long run. The causality direction was evaluated by using the Granger causality test. The results indicate the BFSI industry competition shares a positive relationship with long-term economic growth; on the other hand, financial innovation and economic growth share a significant negative relationship with each other in the long-run. On a short-term basis, competition in the BFSI industry has a negative influence on economic growth vis-à-vis financial innovation has a significant positive relationship with economic growth. The Granger causality tests predict a unidirectional causality between competition in the BFSI industry and economic growth while financial innovation and economic growth share a bidirectional causality.